OT:RR:CTF:VS H307030 EE
Port Director
U.S. Customs and Border Protection
John F. Kennedy International Airport
Building 77, 2nd Floor, Executive Office
Jamaica, NY 11430
RE: Application for Further Review of Protest No. 4701-18-100157; Eligibility of Certain Gold Jewelry under the United States – Oman Free Trade Agreement
Dear Port Director:
This is in response to an Application for Further Review (“AFR”) of Protest No. 4701-18-100157, timely filed by counsel on April 3, 2018, on behalf of the importer, Supreme Jewelry Inc. (hereinafter, the “protestant”), concerning the eligibility of certain gold jewelry for duty-free treatment under the United States – Oman Free Trade Agreement (“OFTA”).
FACTS:
The merchandise subject to the protest at issue, 21,850 grams of 22 karat assorted gold jewelry, valued at $825,200, was entered on February 23, 2017 by the protestant duty-free under subheadings 7113.19.29 and 7113.19.50, Harmonized Tariff Schedule of the United States (“HTSUS”), as entitled to preferential tariff treatment under the OFTA. On July 18, 2017, the Port issued a Request for Information (CBP Form 28) to the protestant requesting supporting documentation to substantiate the claim for preferential treatment including invoices, bill of materials with manufacturer names, manufacturer affidavits, cost data, production and manufacturing records, transportation documentation and payment records for the raw materials received at the factory as well as factory production records for the completed article, and a certificate of origin. The port also requested that all documents must be in English.
On August 22, 2017, CBP issued a proposed Notice of Action (CBP Form 29) stating that no bill of materials with manufacturer names, manufacturer affidavits, cost data, or production and manufacturing records were provided. The information requested included transportation documentation and payment records for the raw materials received at the factory as well as factory production records for the completed article. The port also requested final cost payment and proofs of payment. The port indicated that if this information was not provided after 20 days, preferential treatment under OFTA would be denied. The port also stated that all documents must be translated into English. On September 15, 2017, CBP issued a CBP Form 29 advising the protestant that an action had been taken to deny the claim for preferential tariff treatment under the OFTA to the entry which was the subject of the verification. Specifically, the port indicated that the protestant had not demonstrated that the gold jewelry was actually manufactured in Oman since sufficient information such as bank records, wire transfers, and cancelled checks for payment of goods and raw materials was not provided. Subsequently, CBP liquidated the entries on October 6, 2017, denying OFTA treatment. Counsel for the protestant timely filed a protest on April 3, 2018, claiming that the imported merchandise qualifies for duty-free treatment under the OFTA.
The protestant states that the street address of the actual manufacturing/production facility of Abu Aisha is Shop No. 561, Mutrah Gold Souk, Mutrah, Post Code 114, Oman and the street address of Farida Bint Mohammed Trading is Shi No. 1496, Mutrah Gold Souk, Mutrah, Post Code 114, Oman. The protestant states that the manufacturer is unable to provide a summary of the cost data; list of general expenses; production calculations; summary of total hours employees worked; and vouchers issued to each employee. Further, the manufacturer could not provide documents concerning labor costs indicating the employees’ responsibilities as they relate to manufacturing of the merchandise. The protestant also states that the manufacturer could not provide the last names of the employees; vouchers issued to employees providing a detailed breakdown for the cost of labor. Additionally, the protestant states that the manufacturer could not provide receipts for the purchase of the machinery used to manufacture the jewelry and maintenance records for the machinery. The manufacturer also could not provide “the names of the employees who melt the gold, convert it to plates or wires and cast the gold listed on payroll records”.
The protestant provided the following documents in support of the claim that the jewelry at issue is entitled to duty-free treatment under the OFTA:
-A purchase order, dated January 16, 2017, from the protestant to Abu Aisha Unique Projects LLC (“Abu Aisha”) for the merchandise at issue weighing a total of 21,850 grams in the amount of $825,200.
-Invoice number 0218, dated February 19, 2017, from Abu Aisha to the protestant for “Assorted Gold Jewellery” weighing a total of 21,851.78 grams in the amount of $825,560.36.
-A packing list which corresponds to the invoice and lists 1,197 pieces of jewelry weighing a total of 21,851.78 grams.
-A Certificate of Origin, dated February 21, 2017, issued by the Oman Chamber of Commerce & Industry stating that 22K “Assorted Gold Jewellery” are made in the Sultanate of Oman. The Certificate of Origin states that the signature and stamp (of Abu Aisha) have been attested without the chamber bearing any responsibility on the contents of the Certificate.
-A certificate from the Sultanate of Oman Ministry of Commerce and Industry. The content of the certificate is in Arabic with the exception of certain dates.
-Tenancy agreement number 1903997 and 2061729. The content of the agreements is in Arabic.
-Affidavit from Abdul Rehman, owner of Abu Aisha, dated August 9, 2017, stating that the jewelry at issue was manufactured by Abu Aisha in its factory in Oman. He states that all of the materials used in manufacturing the jewelry with the exception of the cubic zirconia stones were of Omani origin. The affidavit also describes the manufacturing process for the jewelry at issue.
-A cash memo from Al-Buraq Al-Akhdhar Trad. & Cont. to Abu Aisha, dated January 20, 2017, for 500 grams of cubic zirconia for 2200.00 Omani Rial.
-A cash memo from Al-Buraq Al-Akhdhar Trad. & Cont. to Abu Aisha, dated January 20, 2017, for 20 kg of copper for 330.00 Omani Rial.
-A cash memo from Ali & Feer Bakhsh A. Rahman Jewellers to Farida Bint Mohammed Trading, dated October 4, 2016, for pure gold weighing 20,700 for 313,273 Omani Rial.
-A cash memo from Ali & Feer Bakhsh A. Rahman Jewellers to Abu Aisha, dated January 23, 2017, for pure gold weighing 21,000 for 306,813 Omani Rial.
-Breakdown of value and origin of the materials.
-Gold manufacturing process log issued by Abu Aisha listing the dates of processing operations such as melting, rolling wire, casting, stamping, etc. which tracks the amount of gold used during the processing operations.
-Description of the manufacturing processes of the jewelry at issue.
-Jewelry manufacturing process chart.
-Photos of individuals working on jewelry, the building, and some of the equipment.
ISSUE:
Whether the gold jewelry imported from Oman is eligible for duty-free treatment under the OFTA.
LAW AND ANALYSIS:
The United States-Oman Free Trade Agreement (OFTA) was signed by the Governments of Oman and the United States on January 19, 2006. The OFTA was approved by the U.S. Congress with the enactment on September 26, 2006, of the OFTA Implementation Act (the Act), Pub. L. 109-283, 120 Stat. 1191 (19 USC 3805). General Note (GN) 31 of the HTSUS implements the OFTA. GN 31(b) sets forth the criteria for determining whether a good is an originating good for purposes of the OFTA. GN 31(b) states:
For the purposes of this note, subject to the provisions of subdivisions (c), (d), (e), (g) and (h) thereof, a good imported into the United States is eligible for treatment as an originating good of a UOFTA country under the terms of this note only if --
the good is a good wholly the growth, product or manufacture of Oman or of the United States, or both;
for goods not covered by subdivision (iii) below, the good is a new or different article of commerce that has been grown, produced or manufactured in the territory of Oman or of the United States, or both, and the sum of --
A. the value of each material produced in the territory of Oman or of the United States, or both, and
B. the direct costs of processing operations performed in the territory of Oman or of the United States, or both,
is not less than 35 percent of the appraised value of the good at the time the good is entered into the territory of the United States; or
the good falls in a heading or subheading covered by a provision set forth [in] subdivision (h) of this note and—
A. each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in such subdivision (h) as a result of production occurring entirely in the territory of Oman or of the United States, or both; or
B. the good otherwise satisfies the requirements specified in such subdivision (h);
* * *
In the instant case, it is not disputed that when the raw materials are manufactured into gold jewelry, they would be substantially transformed. Further, it is also not disputed that the raw materials would undergo a double substantial transformation when processed initially into gold wire, castings, and stampings, which would then be substantially transformed into gold necklaces, chains, bangles, earrings, rings, and pendants. See Headquarters Ruling Letter (“HQ”) 562725, dated May 28, 2003, wherein CBP determined that imported gold and silver ingots underwent a double substantial transformation in the GSP country when made into wire, and the wire was made into continuous lengths of chain links and necklaces. See also HQ 555210, dated April 26, 1989.
At issue in the verification is whether the gold jewelry was manufactured in Oman. The port stated that the protestant did not provide sufficient information, such as production and manufacturing records for the gold jewelry at issue to substantiate the claim that the gold jewelry was actually manufactured in Oman.
Customs and Border Protection (CBP) Regulations applicable to the OFTA are contained in 19 C.F.R. § 10.861 to § 10.890. The issue of verification is addressed in 19 C.F.R. § 10.887 which provides in paragraph (a) that:
A claim for preferential treatment made under § 10.863 or § 10.870 of this subpart, including any declaration or other information submitted to CBP in support of the claim, will be subject to such verification as the port director deems necessary. In the event that the port director is provided with insufficient information to verify or substantiate the claim, the port director may deny the claim for preferential treatment.
As clearly set forth above, the port director may deny the OFTA claim if insufficient information was provided to substantiate the claim that the gold jewelry was manufactured in Oman. As previously noted, the protestant submitted certain commercial documents including a purchase order, a commercial invoice, and a packing list for the merchandise at issue, as well as several cash memos for the raw materials. However, the protestant has not submitted sufficient documentation to establish that the gold jewelry was actually manufactured in Oman. Specifically, the protestant did not submit any information about the employees who produced the jewelry. The protestant stated that it was unable to provide last names of the employees, summary of total hours employees worked, vouchers issued to each employee, and documents concerning labor costs indicating the employees’ responsibilities as they relate to manufacturing of the merchandise. The protestant submitted a gold manufacturing process log which refers to processing by various groups of employees; however, there is no reference to specific employees and their responsibilities as they relate to manufacturing of the merchandise. Without any documentation concerning the employees, the protestant has not demonstrated that the production of the imported jewelry actually occurred in Oman by the alleged manufacturer’s employees.
Moreover, the protestant has not provided sufficient information documenting that the factory where the imported jewelry was produced is actually located in Oman. The information provided concerning the factory includes a tenancy agreement and a certificate from the Sultanate of Oman Ministry of Commerce and Industry, which are both in Arabic despite the port’s request for their submission in English. The protestant did not submit any utility bills related to the operation of the factory. The protestant submitted photos of individuals working on the jewelry, the building and some of the equipment. However, these photos are not date stamped and it is unclear whether they represent the manufacturing of the jewelry at issue. Further, the protestant did not submit purchase receipts for the machinery or any information concerning maintenance records.
Based on the documents provided, we agree with the port that there is inadequate supporting documentation that the gold jewelry was actually produced in Oman. Mainly, we have not been provided any information concerning the employees who allegedly produced the jewelry at issue or detailed breakdowns for the cost of labor. Further, we have not received sufficient documentation related to the operation of the factory such as utility bills or purchase receipts for the machinery or any information concerning maintenance records. Accordingly, we find that the gold jewelry is not eligible for duty-free treatment under the OFTA.
HOLDING:
Based on the information provided, the protestant has not demonstrated that the imported gold jewelry was actually manufactured in Oman. Therefore, the gold jewelry is not eligible for duty-free treatment under the OFTA.
In conformity with the foregoing, the protest should be DENIED.
In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/ which can be found on the U.S. Customs and Border Protection website at http://www.cbp.gov and other methods of public distribution.
Sincerely,
Craig T. Clark, Director
Commercial and Trade Facilitation Division